Michele Bullock becomes first woman governor of Reserve Bank
Michele Bullock will be the Reserve Bank of Australia’s governor from Monday, becoming the first woman to lead the central bank.
The Reserve Bank of Australia’s governor will be Michele Bullock from Monday, marking a historic moment as she becomes the first woman to lead the central bank.
Philip Lowe on Friday stepped down as governor following a tumultuous few years in which he successfully helped steer the economy through the Covid-19 crisis, before being cast as a villain for hiking rates a dozen times despite earlier predicting they would stay on hold until 2024.
Nonetheless, after Dr Lowe’s distinguished 43-year RBA career, Jim Chalmers in a statement on Friday said he “goes with the government’s gratitude and respect”.
The Treasurer also praised Ms Bullock, saying she “will bring exceptional experience and leadership to the role, and I look forward to continuing to work with her”.
Dr Chalmers said “we have a particularly busy period ahead” to implement the 51 recommendations in the sweeping RBA review, which include changing the bank’s mandate to place a greater emphasis on the full employment goal, creating a separate expert monetary policy-setting board, and introducing six-weekly board meetings that would be followed by press conferences.
The Albanese government is optimistic that the government will receive bipartisan support for the legislative changes, which could be presented to parliament as early as the mid-October sittings with a view to commencing from mid-2024.
Dr Chalmers and Ms Bullock will also need to agree on a new Statement on the Conduct of Monetary Policy by the end of the year – a document that sets the ground rules for how the central bank pursues its inflation-targeting mandate.
The Treasurer has also been interviewing candidates to fill the deputy governor position vacated by Ms Bullock, and this week met with opposition Treasury spokesman Angus Taylor.
Mr Taylor said the Coalition was “constructively engaging with the government on the implementation of the RBA review”.
“It is important transition arrangements … be handled in a bipartisan manner to preserve confidence in the bank,” he said.
Steve Miller, a special adviser to asset manager GSFM, said Dr Lowe had presided over the most tumultuous period for any RBA governor since Bob Johnston in the late 1980s and Bernie Fraser in the early ’90s.
Mr Miller, who used to share a house with Ms Bullock when they were both studying at the London School of Economics, said financial markets saw the new governor as a capable, continuity candidate who would not shift the current holding pattern for interest rates.
“She’s a very fine policy practitioner and very competent in the world of academic economics,” he said.
Investors are pricing in a roughly 40 per cent chance of another cash rate hike to 4.35 per cent, and some economists believe the first move by Ms Bullock will be to cut rates next year. But Mr Miller was unconvinced, saying inflation was likely to prove “stickier” than anticipated.
If the RBA was to hike again, it would be at the November Melbourne Cup day meeting, following the September quarter inflation report, he said.
Independent economist Chris Richardson said that in the wake of a sweeping review and its 51 recommendations, “the institution should change and will change, but … you would also expect things to mostly stay the same”.
Mr Richardson agreed that Dr Lowe had a “famously rollercoaster set of conditions to deal with”, and that Ms Bullock should not expect the same turbulence during her seven-year term.
However, Dr Lowe in his final speech warned of a more volatile world, in which supply shocks, climate change and deglobalisation made it more difficult for policy makers to keep inflation within the 2-3 per cent range.
Mr Richardson said: “I think ‘volatility’ should be stapled to the forehead of every decision-maker in Australia”.
Ms Bullock in her last public address as deputy governor on August 29 said she was “reluctant to give any sort of predictions on how long interest rates might have to stay high”.
“In Australia’s case, all I can say is that we may have to raise interest rates again. But we’re watching the data very carefully and we’ll be taking decisions – for the time being, until next year at least – month by month,” she said.
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